The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Itau Unibanco (ITUB). ITUB is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.94, which compares to its industry's average of 7.94. ITUB's Forward P/E has been as high as 9.52 and as low as 6.05, with a median of 7.75, all within the past year.
We also note that ITUB holds a PEG ratio of 0.44. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ITUB's industry currently sports an average PEG of 0.79. ITUB's PEG has been as high as 0.60 and as low as 0.32, with a median of 0.43, all within the past year.
Another notable valuation metric for ITUB is its P/B ratio of 1.43. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.51. Over the past year, ITUB's P/B has been as high as 1.87 and as low as 1.15, with a median of 1.49.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ITUB has a P/S ratio of 0.97. This compares to its industry's average P/S of 1.48.
Finally, we should also recognize that ITUB has a P/CF ratio of 7.35. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.70. Over the past year, ITUB's P/CF has been as high as 9.94 and as low as 6.52, with a median of 8.13.
Investors could also keep in mind Banco Santander (SAN), an Banks - Foreign stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Additionally, Banco Santander has a P/B ratio of 0.54 while its industry's price-to-book ratio sits at 1.51. For SAN, this valuation metric has been as high as 0.60, as low as 0.37, with a median of 0.46 over the past year.
These are only a few of the key metrics included in Itau Unibanco and Banco Santander strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ITUB and SAN look like an impressive value stock at the moment.
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